Spoilers in this thread:
As a villain? As a character in general?
I personally don't see why people like Sephiroth. He barely has any lines, NO personality, and his only crowing achievement was killing the *arguable* love interest. The only reason Sephiroth killed off Aerith was because Nomura wanted to change the love interest halfway into the game, but he didn't want a love triangle, so he too the easy route out and killed her off. It made people think Sephiroth was the coolest thing since sliced bread, and Aerith was the most tragic character in any RPG ever, therefore leading many people to hail Final Fantasy 7 as the best RPG ever. To me, it seems like people only think he's cool for the sake of being cool, with him wearing a long black trenchcoat, being almost mute, and doing something horrible and simply walking away like a "badass".
Sephiroth is SORT OF the product of being from a broken home, more or less, but a few villains that come from similar backgrounds, like Dio, for instance, from JoJo's Bizzarre Adventure are much, much better. Of course Dio is from a Manga and anime, and only appears in a few fighting games, but honestly.
Dio had an abusive father who worked his mother too hard and his mothers death caused Dio to hate his father, and eventually drove him to murder his father. Not QUITE the same setting as Sephiroth, but both were motivated by their mothers in some way.
If you don't think that comparison is fair or makes much sense, lets just compare Sephiroth to the prior FF villain, Kefka.
Kefka had a physical reason for being insane, as his brain was warped by having magic infused within him. Kefka did all his deeds for himself, was very evil and underhanded, did evil deeds for the sake of being evil, and his twisted sense of humor would make one liken him as Final Fantasies answer to the Joker. Mind you he was wearing court makeup like a Japanese actor or something, and not meant to be an actual Clown, as some may have called him when the game first came out. Also, Kefka had a ton more dialog than Sephiroth, as well as a lot more screen time. I asked this same thing to others, and all the said was "Well after you escape from Jail in FF7 in the Midgar building and you see blood everywhere, it made me think WOW THIS GUY SURE IS BADASS". Yeah its also really easy to draw a picture of a Midgar Serpent being impaled on a tree, too. Such a cheap way to make a villain "feel" more like a badass, and I'm sure little kids and first time RPGers thought it was awesome.
Keep in mind, this thread is all in retrospect, as I used to think Sephiroth was the end all be all villain in RPG gaming history. But back then, I was dumb and immature, and haven't played many RPGs, especially FF6 (all the way anyway) back then.
And before anyone says it, this is not a "Its cool to hate popular things" thread, just me making some observations. Its mainly the sheer amount of love a certain character has achieved that annoys me, even more so when they don't deserve it.